Worldwide luxury sales will grow at less than half last year’s pace in 2012, led by a slowdown in Europe, and expand at a similar speed through 2015, according to Bain & Co.
Spending on luxury apparel, accessories, watches, jewelry, perfume and other personal items in 2012 may climb 5 percent to 212 billion euros ($273.8 billion), excluding currency shifts, Bain said today in a report. That compares with growth of 13 percent last year, the consultant estimated.
Luxury-goods makers have reported divergent sales patterns since the end of August as an imminent government-leadership change in China and Europe’s sovereign-debt crisis take their toll on demand at some companies. While sales of the most expensive products are increasing, “aspirational” luxury consumers are less willing to shop, Burberry Group Plc Chief Financial Officer Stacey Cartwright said on Oct. 11.
“Concerns about market weakness are somewhat overblown,” Claudia D’Arpizio, a Milan-based partner at Bain and lead author of the study, said in a statement. “But we are seeing sharp disparities between brands that are not keeping up with the quickening pace of change in the market and those that are adjusting to shifts in tastes and demographics.”
The euro’s decline on currency markets may boost sales on a reported basis, lifting revenue by 10 percent this year, Bain said. In the fourth quarter, sales may rise 7 percent, it said.
This year’s industrywide sales growth will be led again by Asian consumers and by demand for leather accessories, watches and jewelry, according to Bain. One in four luxury shoppers is Chinese and they are becoming increasingly sophisticated, choosing quality over logos, the consulting company said.
The key economic trend affecting the luxury industry in the next few years will be a generational shift, with consumers under the age of 35 seeking significantly different experiences from luxury consumption than their older peers, Bain said. Younger buyers favor uniqueness over heritage, access over exclusivity and entertainment over shopping, according to the consultant.
The luxury-goods market will grow by 4 percent to 6 percent annually from 2013 through 2015, excluding currency effects, to as much as 260 billion euros, Bain estimated.
“Fundamentals for growth remain strong, but it’s going to be a bumpy ride,” D’Arpizio said. “The strategies that brands relied on to win in the past simply aren’t going to connect with the segments that will matter most in the second half of the decade.”